A very false narrative: Microsoft Surface vs Apple iPad, Mac

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To be fair, this is standard boilerplate that you find in every company's SEC filings where they outline potential risks to the business. It's a legal requirement. I'm sure you can find similar language in Apple's SEC filings. Means something, but honestly, not much.

It would be a niche product on top of the mainstream laptop lineup. I don't think people would have a hard time with the price as long as the drawing input is class leading, keyboard input is acceptable and iOS app integration is good.

If you do the straight addition of the bottom SKUs of the iPad Pro 12.9 onto a 2015 MBP15, the end result is:

This is the older MBP15. The new MBP15 TB shaved 0.10" of thickness, went down to a 77 WHr battery and lost 0.5 lb.

Integrating an iPad onto a MBP means these combined numbers will get better, and maybe it gets down to 0.75" thick, 5 lb, and a 100 WHr battery. Something the size of my 2015 MBP15.

It'll cost $3000 or more no doubt. But if the flexibility of input methods are realized, that cost can be driven down with time, and models starting at say $1500 could be introduced, like a 12" model.

I really think Apple didn't go far enough with the Touchbar. They should have went all the way with it.

People love their mechanical keyboards yes. But if you can have 200 buttons visible in a virtual keyboard, perhaps productivity can be enhanced, escpecially since you can use words instead of some single letter or iconography. People who love number pads can have one. The arrow key arrangement could be anyway you want.

Then, since it is a touch surface, custom control interfaces could be designed. Like for games. And obviously, something like this could be better as a note taking device, both in classrooms and at home, and drawing pad.

One of the factors built into a price is the expected volume it will be sold in. So Apple could design a really nice $4000 laptop but if it could only be sold in tiny quantities it would make no money.

That's one of the problems with Surface. At its current price it would be very profitable if it sold in the tens of millions instead of 1 million per quarter. At the same time, one reason why it doesn't sell in high quantities is because it competes against very cheap Windows PC alternatives, many of which are much less desirable but also far less expensive. That matters.

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The people who draw up renderings of fantasy hardware often don't think about price or the volume it could to sell at given how much it would cost.

Apples hardware business in the late 80s involved selling high end computers that were ~ $10,000+. It is vastly more profitable today selling mostly $700 iPhones in massive quantities.

Very true that these fantasy renders don't equate to a successful product, but that is part of the fun. The good ones though, try to solve particular problems, and can walk the line on it being viable product.

I'm just thinking how to integrate drawing and writing input into a computer form factor, whose input is designed around keyboard and pointer selection input. The dream of having a digital notebook, something that can replace a handwritten notebook hasn't come about just yet. A tablet with a stylus isn't quite there just yet. Then, how those handwritten notes are integrated into computing workflow on a computing platform isn't all that great either. An iPad Pro with the Pencil is still a bit wonky. I would like to have a sharper pencil and less hot zones (eg, my palm accidentally hitting a close button) in application design. Maybe not enough people find value in in drawing or taking hand written notes to make it worthwhile, and it will be forever consigned to niche-dom.

This has been something Microsoft has been trying to do for about 15 years now. The Surface is only the latest attempt, and they may be seeing the same roadblocks they've seen before with WIndows XP for Tablet PCs or whatever they called it. I've heard the attachment rate for keyboard covers for Surface devices is greater than 1. Ie, more keyboard covers have been sold than Surface tablets. If so, the implication is that people who have tried the Surface are learning they are basically using it like a laptop, which could spell a bit of trouble for Surface upgrade cycles.

I have to think that if I was in school or was in a situation where taking notes was done a lot, something like what was outlined here would be quite attractive. I still want that digital hand written notebook. I'm hoping this dual screen clamshell solves a couple of things. I don't need to be doing origami to access the input surface like it is with keyboard covers. Here it is just opening the clamshell and maybe touching a virtual button to switch off the virtual keyboard or sliding the virtual keyboard away. If I need to type, the keyboard would be there in basically an instant. Obvious that trackpad functionality could be done a lot of different ways.

With so much R&D at Apple, there could be a lot of technologies available in the future to implement handwriting recognition in iOS and hardware. Still, that's a long way from delivering, which may never happen. I would have to believe that Apple and IBM would see many applications for handwriting recognition in enterprise and medicine, just for a couple of examples.

That's one of the problems with Surface. At its current price it would be very profitable if it sold in the tens of millions instead of 1 million per quarter. At the same time, one reason why it doesn't sell in high quantities is because it competes against very cheap Windows PC alternatives, many of which are much less desirable but also far less expensive. That matters.

Full year 2016 revenue for Surface was $4.3B with 17% gross margins. While that's not as sweet as Apple's 38% gross margins it's quite profitable for MS to continue Surface even if 2017 sales slumps for them.

Nadella is correct...the Surface Pro 4 is 20 months old. It's hard to sell a 2015 product at a premium price in 2017...

Operating a product segment with embarrassing revenues for 5 years is not "fine." Surface average quarterly revenue has been $812M for 4 years.

In what universe is $3.2B in revenues "embarrassing"? In comparison AMD saw $3.9B in revenues...

There is no reason a slightly faster chip will turn things around dramatically. Every other PC will have it too.

No dramatic turnaround is required. Folks are holding off buying a Surface because it's a 2015 product. A slightly faster chip will also increase battery life and it likely comes with USB-C/TB3. That allows Surface to be paired with a eGPU which is fantastic for many of the intended users. Even a Core i3 is a decent low-end gaming system when paired with a mid range GPU.

Microsoft developed a smaller Surface but didn't bring it to market because they couldn't afford to.

This is like claiming that Apple developed a new Mac Mini but didn't bring it to market because they couldn't afford to...

The most likely explanation is that their hardware team was invested into bringing their Surface Book and Surface Studio products to market in 2016 and Surface Pro got skipped. This is no different from the Mac Pro not getting any updates because Apple engineers were more engaged with other products. Even a spec bump takes effort.

MS has good customer satisfaction number with the Surface tablets so they are producing a product users like. They will never hit Apple numbers but it's still good business for them.

Microsoft's "success" with it's devices is easily monitored when I leave the Apple Store in the St. Louis Galleria mall location and walk down the corridor past the Microsoft store. Day of the week or time of day doesn't matter, there is never more than one or two customers present to busy the store staff. But it is always a contrast to the numbers of customers at the Apple Store. Sad.

Most of the people in the Apple Store are there for service or help...not buying products. The real difference is in the users on the Windows side, much more self sufficient and on the product side...just works. Different clientele is all and you know that. The days of people going to the Apple store to look a "latest products" are over as their tech is sort of stale but they still need to service the devices and answer user questions.

As that's the case, all the buzz around Surface must be a fluke, right?

Take a look at Microsoft's 10K that was released this morning. Surface sales are down 26%. Verifying that what Daniel has been saying in these posts is correct. The Surface is an iPad killer meme is fake. You bought the meme but few are buying the actual hardware.

Add in OEMs and that's killer to iPad , tons of Surface Pro variants selling well. Exactly why Surface was created to create new categories by meeting a need, showing a reference design at high end, letting OEMs fill the market with options. Rinse /Repeat. The real struggle Apple will have from now on is Surface and Signature PC's (no bloatware) has greatly elevated ALL windows based devices to an Apple level with OEMs...Apple has no answer for that., hence all the struggles for anything not named IPhone so far.

Microsoft's "success" with it's devices is easily monitored when I leave the Apple Store in the St. Louis Galleria mall location and walk down the corridor past the Microsoft store. Day of the week or time of day doesn't matter, there is never more than one or two customers present to busy the store staff. But it is always a contrast to the numbers of customers at the Apple Store. Sad.

I live outside of Salt Lake City, and what I find truly pitiful, is despite MSFT's obvious attempts to copy Apple's Store, down to the layout, the furniture, and even the general color scheme - where Apple's store is clean, streamlined and easy to navigate; the MSFT store is cluttered, the aisles are full of cardboard displays selling crap, the shelves are packed in an unorganized manner, and the tables have cardboard placards with coupons filling every table. The tables are piled with different brands of monitors, each running a different game or piece of software - with no indication as to what they are selling. Instead of being streamlined and neat; it looks like someone is having a garage sale in the mall - it's worse than a Black Friday table in the middle of a store that is going out of business. Who would want to dig through that cacophony of crap? No thanks - I'll just order my software from Amazon.

Operating a product segment with embarrassing revenues for 5 years is not "fine." Surface average quarterly revenue has been $812M for 4 years.

In what universe is $3.2B in revenues "embarrassing"? In comparison AMD saw $3.9B in revenues...

There is no reason a slightly faster chip will turn things around dramatically. Every other PC will have it too.

No dramatic turnaround is required. Folks are holding off buying a Surface because it's a 2015 product. A slightly faster chip will also increase battery life and it likely comes with USB-C/TB3. That allows Surface to be paired with a eGPU which is fantastic for many of the intended users. Even a Core i3 is a decent low-end gaming system when paired with a mid range GPU.

Microsoft developed a smaller Surface but didn't bring it to market because they couldn't afford to.

This is like claiming that Apple developed a new Mac Mini but didn't bring it to market because they couldn't afford to...

The most likely explanation is that their hardware team was invested into bringing their Surface Book and Surface Studio products to market in 2016 and Surface Pro got skipped. This is no different from the Mac Pro not getting any updates because Apple engineers were more engaged with other products. Even a spec bump takes effort.

MS has good customer satisfaction number with the Surface tablets so they are producing a product users like. They will never hit Apple numbers but it's still good business for them.

Having not even looked at the surface world in much detail because I love my Mini 2 and have MBPs and Airs, I think I should mention that I agreed with pretty much everything you said there. I suppose that means the end is near and North Korea will do something stupid soon.

Microsoft's "success" with it's devices is easily monitored when I leave the Apple Store in the St. Louis Galleria mall location and walk down the corridor past the Microsoft store. Day of the week or time of day doesn't matter, there is never more than one or two customers present to busy the store staff. But it is always a contrast to the numbers of customers at the Apple Store. Sad.

Most of the people in the Apple Store are there for service or help...not buying products. The real difference is in the users on the Windows side, much more self sufficient and on the product side...just works. Different clientele is all and you know that. The days of people going to the Apple store to look a "latest products" are over as their tech is sort of stale but they still need to service the devices and answer user questions.

As that's the case, all the buzz around Surface must be a fluke, right?

Take a look at Microsoft's 10K that was released this morning. Surface sales are down 26%. Verifying that what Daniel has been saying in these posts is correct. The Surface is an iPad killer meme is fake. You bought the meme but few are buying the actual hardware.

Add in OEMs and that's killer to iPad , tons of Surface Pro variants selling well. Exactly why Surface was created to create new categories by meeting a need, showing a reference design at high end, letting OEMs fill the market with options. Rinse /Repeat. The real struggle Apple will have from now on is Surface and Signature PC's (no bloatware) has greatly elevated ALL windows based devices to an Apple level with OEMs...Apple has no answer for that., hence all the struggles for anything not named IPhone so far.

I work for a fairly large university (5K staff, 30K students) and the Surface Pro 3/4 has been our default choice for mobile users for 3 years now. We have tried everything from Dell multiple other vendors, and nothing really competes yet.

Just to clarify: you say this is your employer's default choice, and nothing really competes. I would read that as the supplier (employer) making the choice for the user, not that the user finds it meets their needs or desires. Perhaps it is the default choice based solely on price? Or some other criteria that is important to the purchaser, and not the user?

I would go a step further and suggest that in the case of many, if not most, universities and large businesses, the reason why there is a continuation of the MS based PC hardware and software is the fact that the very people who direct and work in the IT departments:1. are MS die-hard fans / users2. need to justify their existence3. buy into the "low" cost hardware available

Sure, there can be issues with software that doesn't have a Mac alternative, but given the fact that Apple addressed that years ago with Bootcamp making the MacBook Pro what used to be considered the best PC you could buy, suggests that's not a good excuse.

So I go back to my three points above as reasons why the PC hangs on. The problem for Microsoft, is that consumers who tried an iPhone, or iPad, when they were really the only game worth considering for a good smartphone or tablet (for the price), unsurprisingly liked what Apple had, got hooked into the ecosystem and started to buy Apple MacBooks, MacBook Pro's and iMacs.

And once they've got Apple at home, many then pushed to use the same thing at work, resulting in many companies, including IBM, to realize that it's better to use an Apple product - even when you factor in the higher initial cost, as they cost less to use over time.

Every company I have worked for, going back to the days when there wasn't such a thing as a PC, now operate using a combination of PC's and Macs, where the PC users are now the exceptions, not the majority they once were. I remember back in 2007, when the first iPhone came out, every business colleague I knew was using a Blackberry. They all laughed at me (I'm a tech early adapter) when I would pull out my iPhone, saying how they could never switch, would never switch, from a physical keyboard to an on-screen keyboard. I would ask them to pull up a website to look at something business related and they'd get this horrid rendering of a site, with almost nothing laid out correctly. I'd pull out my iPhone to show them what it should look like, and this is when the Blackberry shell started to crack. They'd see a website rendered just like what they'd see on their laptop and then they'd start asking what else the iPhone could do.

At one company, a small retail chain run by a very creative owner, there was a mix of Macs and PC's, more Macs than PC's. But when the owners sold to a private equity firm, and new upper management was hired, they came in and pushed to get everyone (outside of the graphic design team) on the same laptop, buying a ton of knockoff Thinkpad's (mostly Compaq / HP versions). I went through 2 laptops in 4 months, both suffering from BSOD syndrome and if I remember correctly, the same issue effected 15 other people as well. I told them I'd use my personal MacBook Pro instead of trying to get another replacement.

I ended up leaving the company shortly after, but my wife still worked there so I would go back and visit occasionally and had to laugh seeing the CEO not only working on a MacBook Pro, but having ditched her Blackberry for an iPhone not even 18 months since coming on board. In fact the CEO was proud to show me she was all "Mac" now. They also went from having three IT people to just one, in part because some many people moved from PC to Mac.

Agreed 100%. Problem is Surface try to be the best of both world - laptop and a tablet combined into one. The issue is both are different interface. Something like a male and a female. What you get is a transgender when you try to combine both!!

That's one of the problems with Surface. At its current price it would be very profitable if it sold in the tens of millions instead of 1 million per quarter. At the same time, one reason why it doesn't sell in high quantities is because it competes against very cheap Windows PC alternatives, many of which are much less desirable but also far less expensive. That matters.

Full year 2016 revenue for Surface was $4.3B with 17% gross margins. While that's not as sweet as Apple's 38% gross margins it's quite profitable for MS to continue Surface even if 2017 sales slumps for them.

Nadella is correct...the Surface Pro 4 is 20 months old. It's hard to sell a 2015 product at a premium price in 2017...

17% gross margin is NOT profitable.

You need to take out R&D, Admin, and especially Marketing and Advertising. Hell the NFL marketing campaign is $400 million alone.

They are most definitely losing money on every single Surface they sell.

Sorry, margins were up 17% in FY 2016 but nobody reported what the margins were that I could find. Nor could I find the ASPs for Surface.

No business is going to spend a premium on Mac hardware just to run Windows. And users aren't going to reboot to jump between MacOS and Windows multiple times a day. Plus Bootcamp requires the purchase of a Windows license, which makes it even more expensive (and pointless) to buy a Mac if you need a Windows application. It's really just about hardware cost and software availability. Most businesses don't care about the overall ownership cost either. They just care about what it costs today.

There are many software development companies in my area that, over time, have learned their lesson and are doing exactly what you say "no business" would ever do.

Having an enterprise license for Windows already, they've learned that durable hardware pays for itself in reduced IT maintenance and downtime (lost user productivity).

I'm not here to argue that any of these products is "better" than the other, just that what Samsung and Microsoft have done recently is apparently more exciting and innovative. And obviously there's something to these narratives or else the author wouldn't feel compelled to address them. This whole article boils down to "Apple is still outselling the competition", which does address the straw man "Apple is doomed" narrative (no one really believes Apple is doomed), but it doesn't really address the heart of the issue, which is that 1) Samsung has come up with a really forward-leaning design while Apple is on year three of their current design, and 2) with the Surface Pro 4, Surface Book and now the Surface Studio, Microsoft has released multiple innovative designs while Apple has done less with their Mac lineup.

The Mac Pro is three years old and turns out to have been a dead-end; the new 12" MacBook was a neat iteration and proof of concept that you could shrink a MacBook Air, but not much of a redesign or really any different that what PC OEMs are doing; the new MacBook Pro has been hammered for it's limitations (somewhat unjustly, IMHO), but even still it's more iterative than innovative, the Touch Bar notwithstanding (and let's be honest, the Touch Bar is not the future); the MacBook Pro also had the unfortunate position of being unveiled at the same time as the Surface Studio, which was a much more exciting unveiling.

Again, I'm not here to argue whether any Apple, Samsung or Microsoft product is better than another, but it is undeniable that folks expect and desire more Apple innovation than they've seen in the last few years.

Surface sales are DOWN 26% this quarter....

I guess all that 'innovation' means little to the people who actually buy the product

Seriously? Are you aware of why Microsoft do the surface? It's not to be apple and become a hardware company, it is to create something, create a category then let the oem's take it forward. Surface may be nearing the end on that basis, hp, linx, eve, Lenovo, and a host of other companies have started doing surface clones with Microsoft helping them to do so. Microsoft create the category and then it seems plan to step back. So your argument about sales is either misunderstanding or deliberate false news.

By the way, I would love Microsoft to be a hardware company! They make great products in my opinion, not going to happen under Satya through, he's not interested in that at all.

2-1s are the way forward I think, the iPad Pro is not a good solution to this, apple need to think different and come up with something creative, that a normal iPad and a £9.99 Bluetooth keyboard couldn't also do.

I'm not here to argue that any of these products is "better" than the other, just that what Samsung and Microsoft have done recently is apparently more exciting and innovative. And obviously there's something to these narratives or else the author wouldn't feel compelled to address them. This whole article boils down to "Apple is still outselling the competition", which does address the straw man "Apple is doomed" narrative (no one really believes Apple is doomed), but it doesn't really address the heart of the issue, which is that 1) Samsung has come up with a really forward-leaning design while Apple is on year three of their current design, and 2) with the Surface Pro 4, Surface Book and now the Surface Studio, Microsoft has released multiple innovative designs while Apple has done less with their Mac lineup.

The Mac Pro is three years old and turns out to have been a dead-end; the new 12" MacBook was a neat iteration and proof of concept that you could shrink a MacBook Air, but not much of a redesign or really any different that what PC OEMs are doing; the new MacBook Pro has been hammered for it's limitations (somewhat unjustly, IMHO), but even still it's more iterative than innovative, the Touch Bar notwithstanding (and let's be honest, the Touch Bar is not the future); the MacBook Pro also had the unfortunate position of being unveiled at the same time as the Surface Studio, which was a much more exciting unveiling.

Again, I'm not here to argue whether any Apple, Samsung or Microsoft product is better than another, but it is undeniable that folks expect and desire more Apple innovation than they've seen in the last few years.

Surface sales are DOWN 26% this quarter....

I guess all that 'innovation' means little to the people who actually buy the product

Seriously? Are you aware of why Microsoft do the surface? It's not to be apple and become a hardware company, it is to create something, create a category then let the oem's take it forward. Surface may be nearing the end on that basis, hp, linx, eve, Lenovo, and a host of other companies have started doing surface clones with Microsoft helping them to do so. Microsoft create the category and then it seems plan to step back. So your argument about sales is either misunderstanding or deliberate false news.

By the way, I would love Microsoft to be a hardware company! They make great products in my opinion, not going to happen under Satya through, he's not interested in that at all.

2-1s are the way forward I think, the iPad Pro is not a good solution to this, apple need to think different and come up with something creative, that a normal iPad and a £9.99 Bluetooth keyboard couldn't also do.

Yeah, I totally agree with you. The iPadPro may be very nice to use with the Pencil, but I'm not an artist and have no interest in it until they add mouse or trackpad support which I think they could easily do but don't want to do Yet because for fear of canabalizing their laptop sales. My one drawback about the I would love a iOS based laptop similar in design to the Porsche 2-1. Its a beautiful, cool design. I think it does the detachable top even better than the surface book. (I probably won't get the Porsche because of service and support -where do you go?) The one thing about iPad missing in both the Surface Pro and Surface Book is the option for builtin LTE. That's why I don't consider the iPad and SP/SB direct competitors. The iPad is more of a move anywhere tablet 90% of the time. The SP/SB are more of ultra lite laptop that can be used occasionally in tablet mode but you wouldn't enjoy full time. Hopefully Apple will wise up and realize that they need to update the iPP. They probably want to push the TouchBar on their laptops first.

Nobody in these comments mentioned that one of the reasons why Microsoft is doing pretty well in education and charities is the insane discount they receive (I worked in both). At times I wondered how Microsoft make any money, if at all, or if they were able to offer these discounts on the back of the ridiculous prices everybody else has to pay, or if it's because of their knowledge of the clever game of locking you in for ever (once you got Exchange, Sharepoint, and MsSql, try migrating in an easy and inexpensive way...).

Unfortunately, most IT managers, directors, or CIOs I have known or know today have no foresight on many of the IT cycle parameters.

I could run the equivalent of Exchange, Sharepoint, AD, and MsSQL on a couple of mac minis while using automatic backup with time machine on a couple of time capsule. In Africa.

Amazing hardware on dirt cheap and powerful software with great durability and expansion-capability.

We won't even get into the hardware and software for end-users/individuals! The sheer value is incomparable. In no PC laptop whatsoever have I found a keyboard and trackpad as good as on a Mac. None. Don't get ne wrong, I do like very much some PC laptops or chrome laptops designs and I found them pretty good to use but, there is just no comparison.

And then, the software. Come on. Whether you like Pages/Numbers/Keynotes or not -- it is a question of taste -- cannot take away the sheer value of these apps. And GarageBand, and iMovies? Just there, you got at least $500 worth of quality software. And I could go on and on (and on).

The school I work in right now gives Surface Pros to all teachers (and has an incentive to get all teachers to pass Microsoft 'passport' certificate to get free extra Surface Pros). Yet, how many times have I had to intervene to make them work properly or wake them from sleep, or even make them play nice with Smart boards or such equipment. How many complaints do I hear about these 'bloody temperamental machines' and that 'they wish management would listen and give them iPads' or that these 'surface Pros weigh a ton'. I am not making it up or exaggerating. This is the every day reality I encountered and still find today.

So, Surface Pro sales down? I am not surprised on one hand, but I am very surprised on the other, knowing how much discount Microsoft is giving.